How Does the Colorado EV Tax Credit Work: Amount, Eligibility, and Claiming

The Colorado EV tax credit gives you $750 off your state income taxes for buying or leasing a new electric vehicle in 2026, with an extra $2,500 if the vehicle’s sticker price is under $35,000. The credit is refundable, so you get the full amount back as a refund even if your tax bill is smaller than the credit. You can claim it on your Colorado return or, at participating dealerships, assign it at the point of sale to lower the purchase price directly.

What the Credit Is Worth in 2026

The base credit for a new battery electric or plug-in hybrid vehicle is $750 for tax year 2026.¹ If the manufacturer’s suggested retail price is below $35,000, a bonus $2,500 is added on top, for a total credit of $3,250.²

The amount is the same whether you buy or lease, but a lease has to run at least two years to qualify.² The credit is open to individuals and to businesses operating in Colorado.

These figures are smaller than in prior years. The base credit was $5,000 in 2023 and 2024, dropped to $3,500 in 2025, and now sits at $750 in 2026. Amounts for 2027 and 2028 have not been set.

Why Refundable Matters

Because the credit is refundable, it works the same for a buyer with a small tax bill as for one with a large one. If you owe $400 in Colorado income tax and qualify for a $3,250 credit, the state sends you a refund of $2,850. Nonrefundable credits can only erase what you owe; this one pays out the balance.

Which Vehicles and Buyers Qualify

You have to be a Colorado resident filing an individual return, or a business authorized to operate in the state filing a corporate return. The vehicle must be new, and it must be titled and registered in Colorado in your name. A used EV does not qualify for this credit, even if it’s new to you.²

The vehicle itself has to meet a few conditions:

MSRP of $80,000 or less, including factory-installed options but not taxes or registration fees. Anything priced above $80,000 gets no credit at all.³
A light-duty passenger vehicle such as a car, SUV, or small truck. Battery electric and plug-in hybrid vehicles both qualify.
Capable of reaching at least 55 miles per hour, which rules out golf carts and low-speed neighborhood vehicles.

Colorado does not currently have a state credit for used EVs. A separate federal used clean vehicle credit may apply, but the Colorado credit will not.

How to Claim It on Your Tax Return

You claim the credit by filling out Form DR 0617 and filing it with your Colorado income tax return (Form DR 0104 for individuals). File a separate DR 0617 for each qualifying vehicle.³

The form asks for:

Make, model, model year, and full VIN. Use the complete manufacturer name, so “Chevrolet” rather than “Chevy.”
MSRP, which decides both whether the vehicle qualifies and whether you get the $2,500 bonus.
The purchase or lease date. If you signed on one date and took possession later, use the possession date.

Attach copies of your vehicle registration and the invoice, purchase agreement, or lease agreement.³ Incomplete submissions delay processing, and missing information can get the credit denied.

Taking the Credit at the Dealership Instead

Some Colorado EV dealers let you assign the credit to the dealership at purchase, which cuts the price on the spot rather than waiting for a refund at tax time.² Not every dealer participates, so ask before you sign anything.

If you assign the credit at the dealer, do not file Form DR 0617 for the same vehicle. The instructions are clear that you cannot claim it again on your return once it’s been assigned.³ Claiming it twice will trigger a review.

Stacking With the Federal Clean Vehicle Credit

The Colorado credit and the federal Section 30D clean vehicle credit are independent. You can claim both on the same vehicle, and neither reduces the other. The federal credit is worth up to $7,500 for a new EV, split into two $3,750 pieces tied to where the battery’s critical minerals are sourced and where its components are assembled.⁴ Some models meet only one threshold or neither, so check the IRS list of qualifying vehicles before counting on a particular figure.

The federal credit has its own MSRP caps ($55,000 for sedans, $80,000 for SUVs, vans, and pickup trucks) and income limits ($300,000 for joint filers, $225,000 for head of household, $150,000 for single filers, using the current or prior year’s income, whichever qualifies you).⁵ You report the federal credit on Form 8936 whether or not you transferred it to the dealer at the point of sale.⁶ A buyer who qualifies for both credits on an EV under $35,000 could see up to $10,750 in combined tax benefits.

EV Registration Fees to Budget For

Electric vehicles in Colorado carry extra annual registration charges that offset some of the credit’s value, because EVs don’t pay gas tax. For the 2025–2026 fiscal year, plan on two additional fees on top of standard registration:

Plug-in electric vehicle registration fee: $60.05 per year for any plug-in vehicle.
Road usage fee: $16 per year for a battery electric vehicle or $11 for a plug-in hybrid.

These are set by the Sustainability of the Transportation System Act and adjust periodically.⁷ A battery electric vehicle therefore adds about $76 a year in state fees beyond ordinary registration costs.

1
Colorado Department of Revenue. Income Tax Topics: Innovative Motor Vehicle Credit
2
Colorado Energy Office. Electric Vehicle Tax Credits
3
Colorado Department of Revenue. DR 0617 – Innovative Motor Vehicle and Innovative Truck Credit
4
Federal Register. Clean Vehicle Credits Under Sections 25E and 30D; Transfer of Credits; Critical Minerals and Battery Components; Foreign Entities of Concern
5
Internal Revenue Service. Credits for New Clean Vehicles Purchased in 2023 or After
6
Internal Revenue Service. How to Claim a Clean Vehicle Tax Credit
7
Colorado DMV. Taxes and Fees